Sat. Mar 2nd, 2024

Large US banks announce reductions ;mixed results

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JP Morgan Chase & Co. headquarters in New York.

Agence France-Presse

The major American banks published mixed results on Friday, weighed down in particular by exceptional charges, but gave encouraging news from the American consumer.

Opening the U.S. earnings season, JPMorgan Chase, Bank of America, Wells Fargo and Citigroup all reported better-than-expected net profits in the fourth quarter of 2023.

But all of them also recorded disappointing turnover figures, with Bank of America (BofA) and Citigroup even seeing their revenues fall year-on-year.

Citigroup has announced a major restructuring, with the elimination of 20,000 positions worldwide in the medium term, or a tenth of its workforce.

The bank saw its turnover decline by 3% and had to pass a series of charges and provisions which weighed down its result by 4.6 billion US dollars (approximately 6.2 billion Canadian dollars).

The accounts of large general establishments (the investment banks Morgan Stanley and Goldman Sachs will publish on Tuesday) have all suffered the after-effects of the banking crisis from last year.

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All of them had to contribute in the fourth quarter to the reconstitution of the deposit guarantee fund. The Deposit Guarantee Agency, the FDIC, had to absorb some 16.3 billion losses (approximately 22 billion Canadian dollars) following the failure of several American establishments, notably Silicon Valley Bank and Silvergate. Bank.

In the process, Signature Bank and First Republic were overtaken by the contagion and urgently sold to New York Community Bank and JPMorgan Chase respectively. p>

The four banks that reported Friday paid $8.6 billion, in total, to the deposit guarantee fund (about $11.5 billion Canadians).

Apart from this hefty bill, these large brands have rather benefited from the banking crisis, which prompted many savers and companies to leave regional banks to take refuge with the big names, considered more solid.

During the quarter, they benefited from the high level of interest rates, which American central bank (FED) increased to their highest since early 2001.

Large American credit institutions nevertheless said they expected a reduction in interest margins, due to possible rate cuts by the Fed this year.

Moreover, while the ;American economy shows signs of slowing, American banks have increased their provisions for bad loans, but in measured proportions.

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